FRAUD, personal injury claims and increased repair costs have caused the biggest rise in car insurance premiums since the AA began its records, it has been reported.
According to the latest AA British Insurance Premium Index, which measures premium movements for 2,800 car insurance customers from more than 80 brokers, car insurance premiums soared by more than 11 per cent during the quarter ending June 30. The increase is the largest the index has seen since it began 16 years ago.
Key figures from the report show that the average cost of comprehensive car insurance during the second quarter of 2010 went up by 12.1 per cent to £980.05, and third-party, fire and theft cover went up by 15.8 per cent to £1,224.99
The increases have been partly attributed to the rising cost of repairs, an increase in personal injury claims and increased insurance fraud.
Though the number of accidents on the road have fallen, the cost of repairs are said to have gone up by around 7 per cent, according to the AA.
Younger drivers appear to have been hit hardest by the rises, as they tend to opt for third-party fire and theft cover, generally on cheaper, older cars.
AA Insurance Director Simon Douglas said: “More and more insurers are withdrawing this type of cover because it is unprofitable. In a few years it could well disappear altogether.
“In addition, under-21-year-olds looking for cover on a price-comparison site will find that fewer than half of the companies listed will offer a quote.â€
Steve Sweeney, head of car insurance, said: “Young male drivers traditionally bear the brunt of a ‘boy racer’ reputation through the cost of their premiums.â€
Additionally, the Shoparound premium, which is an index of the cheapest quotes, found that the average cost of premiums sold through price comparison sites like Money Super Market, Compare the Market and Go Compare – amongst others, rose by 12.7 per cent.
These types of sites may also have contributed to a relatively-new type of insurance fraud, according to the AA, whereby dishonest customers are failing to give wholly accurate information when filling in their details online, to obtain a cheaper premium.
AA President Edmund King said: “Comparison sites can enable dishonest individuals to manipulate information to get a lower premium. Insurers are increasingly charging higher prices to these people to cover the increased fraud risk.â€
The motoring organisation has also predicted further rises to come as insurers have been making huge underwriting losses.
